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Optimal taxation in infinitely-lived agent and overlapping generations models: a review

Erosa, Andrés and Gervais, Martin (2001) Optimal taxation in infinitely-lived agent and overlapping generations models: a review Economic Quarterly, 87, (2), pp. 23-44.

Record type: Article


A survey of the literature on optimal taxation both in infinitely-lived agent models and life-cycle economies suggests that no consensus emerges regarding the optimal tax rate on capital income. Although the tax rate is invariably zero in the long-run steady state of infinitely-lived agent models, this same zero-tax prescription holds for life-cycle economies only under extremely stringent conditions. Both models suggest that capital income should be taxed at non-zero rates during the transition to long-run equilibrium unless individuals have separable preferences between consumption and leisure.

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Published date: 2001


Local EPrints ID: 47644
ISSN: 1069-7225
PURE UUID: e0a827ab-22a6-4ee0-b4ec-2b31a56c3fc8

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Date deposited: 07 Aug 2007
Last modified: 17 Jul 2017 15:03

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Author: Andrés Erosa
Author: Martin Gervais

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